Ingot furnace supplier LDK Solar and integrated trading company Sumitomo Corporation have announced the termination of their long-term solar wafer supply agreement.
Under the terms of the agreement, originally signed in September 2008, LDK Solar was to supply multicrystalline silicon wafers to Sumitomo over an eight-year period, beginning in 2009 and extending through 2016. As part of the original agreement, Sumitomo made an advanced payment representing a portion of the contract value to LDK Solar.
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In exchange for LDK's agreement to terminate the supply agreement, Sumitomo has agreed to pay LDK Solar a settlement amount totaling US$33.4 million.
“We are pleased to have reached a mutually agreeable conclusion to our 2008 wafer supply contract with Sumitomo,” stated Xiaofeng Peng, chairman of LDK Solar.
“We look forward to establishing a new commercial relationship with Sumitomo. We will continue to work closely with our customers and partners as we navigate the current industry challenges.”
LDK continues to mount losses, reporting a net loss for the second quarter of 2012 that was higher than its revenue levels. The company is assessing the financial impact on its full year 2012 earnings of the Sumitomo termination and related contract termination charges having appointed a new CEO and five new board members.
The company continues attempts to improve its financial position, including the sale of plants to a supplier as payment for debt, a share sale to Heng Rui Xin Energy Company and a bailout from the government of Xinyu.
In October, NPD Solarbuzz reported production equipment order cancellations and forced shuttering by solar PV manufacturers this year having already exceeded US$3 billion.